ExpertAGAnswered2 days ago

The bank statement is debited and credited from the point of view of the bank and not us.

Hence it is opposite of what we would do in our books of account.

Explanation:

The bank statement is prepared by the Bank. For the bank we are a customer and the bank statement represents the Customer account in the books of bank.

When there is a deposit made, in our own books we will debit the Bank account.

For the bank, money comes in and so they will debit their cash account and credit the customer.

Hence every deposit made by us shows as a credit in the bank statement.

When there is a withdrawal made, in our own books we will credit the Bank account.

For the bank, money goes out and so they will credit their cash account and debit the customer.

Hence every withdrawal made by us shows as a debit in the bank statement.

You guys are on top of this!

You are correct. It is a matter of perspective. It is important for the remainder of this class to put yourself in the shoes of the company, not the consumer or customer. Things will sort out a bit quicker if you can do that.

The other thing is that we have to start thinking of a transaction (like a deposit from a customer) as BOTH a debit AND a credit. Not one or the other!!

QUESTION:

What would the actual journal entry look like when we record this transaction of a customer deposit of $100?